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Do you know which side your Brexit is buttered?

The UK faces one of its biggest decisions in the coming weeks with regard to its future either in or out of European Union. The public are repeatedly stating that they feel uninformed about key issues and given the significant implications with regard to Intellectual Property and how it will be dealt with in the event of Brexit, we thought this might be an interesting topic.

The current position

IP right holders in the UK can currently register and enforce trade marks and design rights (both registered and unregistered) at national and EU level. The complimentary system offers a cost-effective way of securing and enforcing protection across the whole of the EEA in one registration.

The UK also participates in a centralised patent regime, the European Patent Office (EPO). The EPO provides a standardised application process which rewards successful applicants with a set of member state patent protections which can be enforced in the respective domestic courts.

Furthermore, UK IP law is generally subject to EU harmonisation. This is particularly relevant for areas of IP where there are not centralised regimes, such as copyright. Harmonisation can be direct, e.g. through the use of directives whereby UK parliament must legislate with aspirations of EU objectives, and indirect, such as where UK judges have sought to interpret domestic legislation consistently with decisions of the EU courts. Over time, this harmonisation process has aligned UK IP law with EU law by varying degrees.

The position post-Brexit

The unofficial slogan of the referendum is uncertainty and whilst it is impossible to say for sure what the position post-Brexit would be, we can make informed predictions based on the fact that the UK’s renegotiated terms are expected to emulate one of two established models:

the Norwegian model – whereby the UK would remain a member of the European Economic Area (EEA) by virtue of its membership of the European Free Trade Association; or

the World Trade Organisation (WTO) model – this is where the UK leaves the EU and the EEA. International trade would still be governed by basic WTO rules but the UK would not be subjective to European directives.

Depending on the type of model the UK pursues, the IP implications are reasonably expected to be as follows:

Trade marks

Trade marks present a much more difficult issue. For starters, the EU trade mark (EUTM) is valid in all member states. If the UK is no longer a member state then the EUTM would not be afforded protection in the UK.

Secondly, we would anticipate that transitional regulations would be implemented to enable nationalisation of EU marks. However, given the very different examination and opposition procedures between the EUIPO and our own much loved IPO, not least due to the fact that neither the IPO nor the EUIPO actively notify the other of conflicting application, the potential for confusion and disharmony is high. We would advise owners and licensees of UK trade marks to be proactive in monitoring for and objecting against the conversion of EU marks to UK marks where this would be to the detriment of their existing registrations.

Thirdly, in order to file an EUTM, which we anticipate clients will still wish to do, the client must instruct a professional agent with a business presence in the EU. This will mean that all current practitioners – be they TM attorneys or solicitors, without a place of business in another member state, will need to sub-contract that work to a professional domiciled in the EU.

Holders of EU trade marks must use their mark in the EU within 5 years of registration otherwise they are vulnerable to challenge. Post-Brexit, use of the mark in the UK may not meet this requirement and owners of EU trade marks may find their registrations vulnerable, subject to the EU and UK Intellectual Property Offices implementing an interim arrangement, such as permitting the conversion of EU marks to UK marks as discussed above.

Holders of questionable or tenuous EU trade marks (such as those successfully registered despite not meeting the relevant requirements for validity on re-examination) may be hesitant to convert their mark to a UK trade mark for fear of refusal. Unused trade marks may not be converted at all and the falling away of unused or dubious European Trade marks may be seen as a plus to others who may have been previously discouraged from using similar marks for legitimate business ventures.

Design rights

As with trade marks, the position regarding registered EU Designs will be impacted significantly post-Brexit. EU registrations and Community Unregistered Design Rights are enforceable in all member states. If Brexit happens then neither will be enforceable in the UK.

However, unlike trade marks, registered designs have a ‘first to file’ novelty requirement to them. This means that clients with existing EU registrations will be unable to refile in the UK as their EU registration will be ‘prior art’ to any subsequent application they may wish to make in any other territory. Quite how the UK proposes to deal with this issue will be interesting to see.

With a valid UK design registration and also with regard to UK unregistered design right, UK owners would still be able to prevent copies of their design from being imported into, manufactured or sold in the UK. However, the UK would need to negotiate fresh protections with the EU and until then rights holders may find themselves lacking robust means of enforcement against continental design copiers.

Another interesting twist would be to see whether post-Brexit, the UK falls outside of the EEA and therefore becomes excluded from the doctrine of ‘exhaustion of rights’ – where the legal sale of a product with the IP rights owner’s consent within the EEA exhausts the owner’s right to prevent or otherwise control the subsequent resale of products within the EEA. There is greater implications for parallel importing, as a result.

Patents

As a signatory to the Patent Co-operation Treaty, UK patent owners apply to the European Patent Office which currently grants a package of domestic national patents through a unified application procedure. As it is not an EU institution it would not be impacted by Brexit.

The UK is currently set to become a signatory to the EU unitary patent regime (due to be implemented this year, Brexit pending). The intention is to introduce a standardised ‘EU patent’ which would be enforceable in the central Unified Patent Court. The underlying agreement, as currently drafted, only permits for EU members to be party to it and so post-Brexit, the EU would have to decide whether to rewrite the agreement or refuse UK involvement entirely.

Divergence of law generally

As discussed, UK law is subject to direct (e.g. by EU regulations and directives) and indirect influence from the EU. Without this influence, UK parliament is free to enact and UK judges are free to interpret IP law in accordance with British traditions, whether pre-existing or emerging without recourse to the European Courts. This has implications for and would put an end to the current practice of referrals to the Court of Justice of the European Union from our UK courts for clarity on points of EU law.

It is probable that the UK would still be subject to EU directives by virtue of its membership of the EEA and that divergence of IP law may therefore be very limited as EU law continues to shape UK legislation.

Conclusion

At a practical level, Brexit would mean substantial changes in current practices for registration and enforcement of most intellectual property rights. The current and proposed European regimes offer substantial convenience and cost savings for rights holders who benefit from a ‘one stop shop’ for registration and pursuit of infringers. Although the precise arrangements post-Brexit remain uncertain, there is almost certainly going to be an increased administrative and regulatory burden for IP rights holders in order to address the increased duality between the UK and EU approaches.

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